Saturday, January 18, 2014

Baby boomers are facing a big, and I mean very big, problem
during the next thirty years: a serious lack of housing. When we reach a certain age
we tend to have difficulties with the usual issues of home maintenance and
care. We all have to face the fact that we just can’t do a lot of the things we
liked to do once upon a time. And now we're looking at the clock a lot more and
the bucket list and the whole issue of stairs and darker rooms, and seeing the
buttons of the remote, and your kids saying things like, "Why do you have
the TV so loud?"

To most of us the biggest issues are health, mobility,
safety, and money. The usual course for most of us is to age in place, assuming that stairs are not a problem, you can afford
trustworthy in-house health professionals, maybe a maid or a cook, and once in
a while a chauffeur. Most of us aren't blessed this way and the kids
have their own families to deal with. And besides, your preference isn’t to
have them take care of you anyway.

More than fifty years ago Del Web built the first of the Sun
City retirement communities, they became the model on which hundreds of other
like communities and senior/active adult villages were built. Due to changes in
the federal laws which allowed legalized discrimination based on age, these
communities have continued to age, like boomers, in place. Many of these
communities are now old and dated, the houses show the wear and tear of time and
the facilities are too costly to maintain. And the new recruits – the Boomers -
are now looking for something different.

By 2050 the number of Americans over the age of 65 will
double from 40 million to more than 80 million. This age group is now about one
in eight; in 35 years it will be one in five. Every year more people live to
past 85 and there are more over the age of one hundred than anytime in our
history. Other countries, such as Japan, are even worse.

Where will you live when you "retire?" In your
current home? In a high-end retirement community? In a subsidized senior
housing project? With you kids? There will be serious consequences to your
family, your finances, your health, if you make the wrong choice. The biggest
problems, right now, are the lack of choices with respect to housing – the
retiree's biggest cost. It will soon become a buyers market, those with money will determine the market.

Believe it or not, one positive out of all this is that
if significant numbers of homes and apartments can be built for this Boomer market,
large numbers of existing homes become available to the marketplace. This is
definitely a trickle-up scenario. Each year millions of Boomer residents will
sell and move – freeing up housing. The problem right now is where can they buy/rent/co-own
and move?

The over 65 market is growing and their need for housing is
growing. The opportunities are huge but the development community is slow to
the table. This housing model is different; the Boomer customer is more demanding, is better educated, more experienced, and is wealthier. It's a market not understood to many in publicly traded development companies. We all need a place
to be happy and grow old and our expectations are not currently being met by
the marketplace. And besides not everyone wants to move to Florida or Arizona.

This niche of housing requires land near population centers,
high quality construction, facilities, recreation, and above all experienced
management. It also requires new financing/cost models that allow this market
to protect their equity and preserve their dignity. This cadre's biggest fear
is that they will have more years left than money. Development companies that
can create quality projects with long term guaranteed benefits and security
will be the winners. City and towns will have to find ways of adjusting their
fee structures, zoning and approval procedures to help move the project
forward. We will need millions of these units over the next ten years and they
need to be started now.

Thursday, January 9, 2014

Within every major and even minor city a battle is underway
between three bodies with specific agendas and very large political
constituencies for control of the most important chunk of every community, its
streets. The players in this very dangerous game are vehicles, bicycles and
pedestrians. And there are no real winners. Reminds me of rocks, paper, and
scissors, except for the part about people getting injured and killed.

Vehicles (buses, trucks, cars) own the road, due not
entirely to the taxes paid to keep them up, but to the serious issue of two
tons (and more) of steel versus 180 pounds of flesh and bone. Drivers want the
roads to move quickly and efficiently, have minimal durations at stoplights,
and broad spacious lanes. Crosswalks are for pedestrians not just pause and
slide zones, we say we are courteous drivers, but we also prove daily that we
are inattentive, rude, and in a hurry. Faster is better.

The bike industry (and it is one now both politically and
physically) literally wants a piece of the road – for free. They are entitled
to it (having paid in as drivers and tax payers), "where our bike lanes?"
they demand. Where is our secured parking? We should have separate traffic
rules for us and why not? We bicyclists are more concerned about the
environment, our health, and our community. Give us eight feet, each side, and
we will try not to scare the be-jesus out that 85-year old woman who is trying
to pass us as she goes to her eye doctor, really we won't. And if the travel
lanes are narrowed by a foot or two so what, it works in Europe!

And the poor pedestrian, the lowliest of the three is safe
as long as they stay to their part of the universe, the sidewalk. There, hidden
safely behind a row of parked cars, they can stroll, push a baby carriage, talk
on their cell phones, enjoy their day – for about 200 feet. For our 85-year old
woman that street crossing looks to be as wide as the Mississippi River and
just as dangerous. For many it is both an issue of time and distance, how long
it will take to cross and how far to the other side, and if can you say a whole
rosary during the trip. There are also many injuries and deaths from bicyclists
striking pedestrians, again safety first – and this is one is on the bicyclist.

Each participant demands priority, us first. But it also
demands an increased level of responsibility. For the driver it's greater care,
responsibly, and civility – there are enough battles going on, on the streets,
between those who think the Fast and
Furious movie franchise as the greatest series ever produced (and a lesson
in city driving) and our 85-year old myopic driver.

In my part of the world (Northern California) our prettier
neighborhood arterials are taken over by spandex warriors (especially weekends)
who think nothing of traveling in packs of 20 or 30 riders like rabid wolves
looking for prey who spill out of their designated lanes and into the travel
lanes demanding obedience – sorry there, got carried away, but just a little. We
know who you are; you wear your colors like a psychedelic street gang with your
tags plastered all over the back.

Suggestions:

Drivers must be more courteous and more aware, cell phones
down (it's the law, or at least the intention), don’t slide through turns,
watch the lights, and remember that that person standing on the corner will do
something unexpected, think of your grandmother. In California, starting in
September 2014, state law requires a vehicle driver to stay at least 3' away
from a bicyclist – try that at 40 mph. And if your neighborhood arterial has
become a defacto bikeway – you must slow to 15 miles per hour (won't this be
fun) when passing.

Bicyclists should buy a license for their privilege of
riding on public streets, a token amount say $25 per year. They can afford it,
and I mean every bike. Register the model number (to be required by every
manufacturer), enforce the surveillance and tickets, and demand financial
participation. This money can be used for enhanced bike lanes and trails,
better safety, and better tracking of stolen bikes. Most in the spandex set
spend thousands on their bikes; this fee is just a pittance. I know there will
be a self-righteous hue-and-cry, but suck it up. You want to play, you must
participate. There can’t be a free ride in this.

For pedestrians watch what your doing and where you are – at
all times. Where possible, cities should reduce the width of the crosswalks or
lengthen the crossing times. And require, in some medians, fencing that will
prevent the more bold (or stupid) from crossing mid-block.

In 2011, 17 pedestrians were killed in San Francisco and
over 800 injured, some seriously. Whose fault? Each was different but in all
cases steel beats flesh.

Friday, January 3, 2014

Where do we go from here? The development world (in the US
especially) is groping about trying to find traction in a world that seems
confused and distracted. Is it housing, commercial, office, higher density,
affordable housing, urban, or suburban? I'm tempted to say all of the above
but, there is always a but, the truth lies in the edges of all of these.

Housing is the dominant driver in almost all real estate
transactions. Where people are - much will follow. And, regardless of the
experts who love urban, the growth will still be in the suburbs. The dream of
most is a home on a lot. My mantra has been for years: The biggest house on the
biggest lot that the buyer can afford. Simple, yes. Complicated, yes. Yet
opportunities will be significant, especially within the 30-mile radius of the
major urban areas. I was once lectured by an experienced planner back in the
early 1990s that the master planned community model was deceased. Well it rose
from the dead like Frankenstein and then proceeded to be put back in the ground
by 2008. Hundreds of master planned communities died on the planning tables
with the collapse of Lehman Brothers and other financial institutions. They
will again arise due to demand and economies of scale.

Commercial/retail is always a romantic model, cool retail
villages, neat neighborhood centers, urban ground floor retail. Yet we are so
commercially overbuilt in retail that most markets will see a constant
rebooting of existing projects until a mix works. It will be tough but even the
retailers themselves are changing and morphing to find niche markets. Look for
strong entrepreneurial retailers to try new and exciting things over the next
few years to take advantage of competitive rents and locations. Reconstruction
and expansion of existing structures will lead the way. There are no easy
answers here.

Office markets, like commercial/retail, are also overbuilt.
This overhang in square footage will take time to be reabsorbed, buildings will
be remodeled, updated and even repurposed (with housing in many markets).
Cities will look at horizontal mixed-use as strong alternatives to their
problems. Again aggressive developers will see great opportunities, but it is
not a market for the timid.

Higher densities are always in vogue, yet have been very
difficult to achieve outside the dense urban centers. And apartment density is
always relative. 40 units to the acre in one location is appropriate for some
markets, 18 units per acre (the old model from the seventies) is probably more
appropriate for many ex-urban markets. There has been a dearth of apartment
construction during the past ten years (or more) primarily because the
foreclosure market has absorbed the demands of the rental market. But now with
the strengthening of single-family home sales, renters are being literally pushed out.
They will need places to live and not just in urban markets. Look for strong
improvements in this sector as we move forward over the next few years. And
this will be in middle to small markets as well.

Affordable housing is a political football, "build it
everywhere except in my backyard." Social NIMBYism. This only works where there is some
form of political cover and subsidy (like electric cars). I see many of these
business models morphing into more realistic projects that are a mix of both
for sale market driven projects with subsidized components. Will they work?
This remains to be seen, due in part to the significant social issues that are
brought to bear. As I've said before build more market driven housing, this
will free up the lower cost existing housing stock. Look for serious battles in
this segment over the next few years.

The numbers continue to show that the growth is still going
to the suburbs. You can believe what you want but the census numbers show this
across most of the country. This growth will continue in outlying suburban towns that are safe and well managed politically and financially. Diversity is
thriving in these towns and villages and will continue, and all the fancy
demagoguery about the sterile suburb (a self-serving fallacy at that) won't change this fact. Developers will
find a good home in these markets.

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About Me

Greg was born in 1949 in Traverse City, Michigan. Raised near Chicago he moved to California in 1971. The son of a journalist and entrepreneur, Greg has never forgotten his roots; his non-fiction work has focused on the Midwest region. Californian by choice, Mr. Randall makes his home in Walnut Creek, California with his wife, constant companion, and business partner. His preferred fiction genre is mystery/thrillers and historically based novels.